Pound Tumbles as UK GDP Disappoints

The British pound fell on Thursday after the economy's slower-than-expected growth could prompt the Bank of England to cut interest rates. GDP rose only 0.1% in November, below analysts' expectations. The derivatives market anticipates 58 basis points in rate cuts by the year's end.

The British pound slid on Thursday after data revealed that the UK economy grew more slowly than anticipated in November, potentially allowing the Bank of England more leeway to reduce interest rates this year. The Office for National Statistics reported that gross domestic product (GDP) increased by a marginal 0.1% in November, following October's 0.1% decline. This was below the 0.2% rise predicted in a Reuters poll of analysts.

Following the release of the data, the pound dropped to trade 0.31% lower on the day at $1.2207, down from approximately $1.222 before the data release. Against the euro, sterling fell by 0.26% to 84.29 pence from 84.18 pence prior to the GDP figures.

Currently, the derivatives market is pricing in 58 basis points' worth of interest rate cuts from the Bank of England by the end of this year.

(With inputs from agencies.)